[Federal Register Volume 63, Number 131 (Thursday, July 9, 1998)]
[Notices]
[Pages 37112-37114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18080]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

[FRL-6121-8]


Change in Minimum Oxygen Content Requirement for Reformulated 
Gasoline

AGENCY: Environmental Protection Agency.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: EPA's reformulated gasoline (RFG) program contains various 
standards for RFG, including an oxygen content standard. When the RFG 
program was implemented, the per-gallon minimum standard applicable to 
RFG in all covered areas was 1.5% by weight. In 1997, pursuant to the 
RFG regulations, EPA increased this standard by 0.1% to 1.6% by weight 
for several of the RFG covered areas (and for certain refineries, 
importers and blenders) because these areas failed a series of 
compliance surveys for oxygen content in 1996. Certain covered areas 
have failed the oxygen compliance survey series for 1997, and EPA is 
increasing the per-gallon minimum standard applicable to these areas by 
0.1%. Since the previous increases remain in effect, the per-gallon 
minimum oxygen requirement in all but one of these areas failing in 
1997 will increase to 1.7% by weight. This notice announces the 
increased standard, and describes the covered areas and parties that 
are subject to the increased standard. The increased standard will help 
ensure that all covered areas receive the full benefit of the oxygen 
content requirement in the RFG program.

FOR FURTHER INFORMATION CONTACT: Stuart Romanow, Fuels and Energy 
Division, Office of Mobile Sources, Environmental Protection Agency, 
Washington D.C. (6406J) 202-564-9296.

SUPPLEMENTARY INFORMATION:

I. Regulatory Entities

    Regulatory categories and entities potentially affected by this 
action include:

------------------------------------------------------------------------
                                                Examples of affected    
                 Category                             entities          
------------------------------------------------------------------------
Industry..................................  Refiners, importers,        
                                             oxygenate blenders of      
                                             reformulated gasoline.     
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be affected by this 
action. This table lists the types of entities that EPA is now aware 
could be potentially affected by this action. Other types of entities 
not listed in the table could also be affected. To determine whether 
your entity is affected by this action, you should carefully examine 
the existing provisions at 40 CFR 80.41. If you have questions 
regarding the applicability of this action to a particular entity, 
consult the person listed in the preceding FOR FURTHER INFORMATION 
CONTACT section.

II. Background

    Section 211(k) of the Clean Air Act requires that EPA establish 
standards for reformulated gasoline (RFG) to be used in specified ozone 
nonattainment areas (covered areas). The RFG requirements contain 
performance standards for reductions of emissions from motor vehicles 
of ozone forming volatile organic compounds and toxic pollutants.
    Standards for RFG are contained in 40 CFR 80.41. Refiners and other 
parties subject to the standards can choose to comply on either a per 
gallon basis or to comply on average. The standards for compliance on 
average (``averaged standards'') are numerically more stringent than 
the per gallon standards. The averaged standards for RFG are contained 
in Sec. 80.41(b). These averaged standards include a per-gallon minimum 
requirement of 1.5 weight percent oxygen. This 1.5% per-gallon minimum 
oxygen requirement initially applied to all refineries, importers and 
blenders of RFG who elected to comply with the averaged standard for 
oxygen. However, as a result of oxygen survey series failures in 1996, 
EPA required that certain refineries, importers and blenders comply 
with a 1.6% minimum, beginning on September 29, 1997.<SUP>1</SUP> (The 
survey process and the consequences of oxygen survey series failures 
are described below.) The per-gallon minimum requirement is in addition 
to the requirement for 2.1 weight percent oxygen, on average. The 
average standard for oxygen must be met by a refiner or oxygenate 
blender for all of the RFG it produced at a refinery or blending 
facility, or for RFG imported by an importer, but these parties are not 
required to meet this standard for the RFG supplied to each covered 
area separately.
---------------------------------------------------------------------------

    \1\ See ``Change in Minimum Oxygen Requirement for Reformulated 
Gasoline'' 62 FR 41047 (July 31, 1997).
---------------------------------------------------------------------------

    Any refiner, importer or oxygenate blender has the option of 
meeting the RFG standards on average or per gallon. If a party is 
subject to the averaged standards, then the requirement to conduct 
surveys, as specified in Sec. 80.68, must be satisfied. In these 
surveys, RFG samples are collected at retail gasoline

[[Page 37113]]

stations within covered areas and analyzed to determine if the RFG 
supplied to each covered area meets certain survey pass/fail criteria 
specified in Sec. 80.68. An oxygen survey series failure occurs in a 
covered area if the annual average oxygen content for all of the 
samples is less than 2.00 weight percent. The purpose of the surveys 
and the tightened standards which result if a survey is failed is to 
ensure that averaging over a refiner's entire production as compared to 
separate averaging for each covered area does not lead to the reduced 
quality of RFG in any covered area.
    Since the implementation of the RFG program in 1995, these surveys 
have been conducted by the RFG Survey Association, a not-for-profit 
association of refiners, importers and blenders, using an EPA-approved 
survey design plan as required in the regulations. By letter dated 
January 30, 1998, the RFG Survey Association reported to EPA the 
results of its surveys for 1997, indicating that several survey areas 
failed to meet the annual average requirements of 2.00% oxygen by 
weight.<SUP>2</SUP> After reviewing the data EPA determined that 7 
areas did fail the survey series for oxygen content.<SUP>3</SUP>
---------------------------------------------------------------------------

    \2\  Letter dated January 30, 1998 from Frank C. Lenski, 
President, RFG Survey Association, to Charles Freed, Director, Fuels 
and Energy Division, EPA.
    \3\ Letter dated March 4, 1998 from Charles Freed, EPA, to Frank 
Lenski, RFG Survey Association. Also see Memorandum dated March 20, 
1998 from Stuart Romanow, Mechanical Engineer, Fuels and Energy 
Division to Charles Freed.
---------------------------------------------------------------------------

    The following covered areas failed the oxygen survey series:
    1. Baltimore, MD area [Sec. 80.70(g)].
    2. Houston-Galveston-Brazoria, TX area [Sec. 80.70(h)].
    3. The entire State of Rhode Island [Sec. 80.70(j)(12)].
    4. The Dallas-Fort Worth, TX area comprised of [Sec. 80.70(j)(13)]:

Collin County
Dallas County
Denton County
Tarrant County

    5. Norfolk-Virginia Beach-Newport News (Hampton Roads), VA area 
comprised of [Sec. 80.70(j)(14)]:

Chesapeake
Hampton
James City County
Newport News
Norfolk
Poquoson
Portsmouth
Suffolk
Virginia Beach
Williamsburg
York County

    6. Richmond, VA area comprised of [Sec. 80.70(j)(14)]:

Charles City County
Chesterfield County
Colonial Heights
Hanover County
Henrico County
Hopewell
Richmond

    7. Washington D.C. area comprised of [Sec. 80.70(j)(2), (j)(6), 
(j)(14)]:

The District of Columbia
Calvert County, MD
Charles County, MD
Frederick County, MD
Montgomery County, MD
Prince Georges County, MD
Alexandria, VA
Arlington County, VA
Fairfax, VA
Fairfax County, VA
Falls Church, VA
Loudoun County, VA
Manassas, VA
Manassas Park, VA
Prince William County, VA
Stafford County, VA

The boundaries of the covered areas are described in detail in 
Sec. 80.70.
    Under Sec. 80.41(o), when a covered area fails an oxygen content 
survey series, the minimum oxygen content requirement for that covered 
area is made more stringent by increasing the per gallon minimum oxygen 
content standard for affected RFG subject to the averaging standard by 
0.1%. This more stringent requirement applies beginning the year 
following the year of the failure. A more stringent requirement remains 
in effect for a covered area unless the area passes all oxygen content 
survey series in two consecutive years. Therefore, with the exception 
of the entire State of Rhode Island, the minimum per gallon oxygen 
requirement for the areas listed above is increased from 1.6% to 1.7% 
by weight. The minimum per gallon oxygen requirement for the entire 
State of Rhode Island is increased from 1.5% to 1.6% by weight. In 
addition, the minimum per gallon oxygen requirement for the 
Philadelphia-Wilmington-Trenton area and the Atlantic City, NJ area 
(Atlantic County and Cape May County), which failed oxygen content 
survey series in 1996, remains at 1.6% by weight.
    The criteria identifying the refineries, importers and oxygenate 
blenders subject to adjusted standards are stated in Sec. 80.41(q). In 
general, adjusted standards apply to RFG that is subject to an 
averaging standard (``averaged RFG'') that is produced at a refinery or 
oxygenate blending facility if any averaged RFG from that refinery or 
facility supplied a failed covered area during 1996, or supplies the 
covered area during any year that the more stringent standards are in 
effect. The regulation provides for an exception based on certain 
volume limits [see 40 CFR Sec. 80.41(q)(1)(iii)].
    Thus, if a refiner has elected for a refinery to be subject to the 
average oxygen standard, and if even a small portion of the RFG 
produced at the refinery is used in an area subject to an oxygen 
ratchet, the entire volume of RFG produced at the refinery is subject 
to the more stringent oxygen standard regardless of which area receives 
the RFG. This result is true regardless of whether the refinery's 
gasoline was supplied to the city in question during 1997 or during a 
year when the more stringent oxygen standard applies.
    Under Sec. 80.41(q)(2), the applicability of adjusted standards to 
imported averaged RFG is specified by the Petroleum Administration for 
Defense District (PADD) in which the covered area is located and the 
PADD where the gasoline is imported. The covered areas that had oxygen 
survey series failures are located in PADDs I and III. Therefore, all 
RFG imported at facilities located in PADDs I, II, III or IV is subject 
to the adjusted oxygen standard. The states included in each PADD are 
identified in Sec. 80.41(r). In addition, if any RFG imported into any 
other PADD supplies any of the covered areas with oxygen survey 
failures, the adjusted standard applies to that RFG, as well.
    Under Sec. 80.41(q)(3), any gasoline that is transported in a 
fungible manner by a pipeline, barge or vessel is considered to have 
supplied each covered area that is supplied with any gasoline by that 
pipeline, barge or vessel shipment unless the refiner or importer is 
able to establish that the gasoline it produced or imported was 
supplied only to a smaller number of covered areas.
    Consider, for example, gasoline transported on the Colonial 
Pipeline, which supplies RFG to several cities that failed the oxygen 
survey in 1997. If a refinery's RFG was transported by the Colonial 
Pipeline any time during 1997, or any time during any year when the 
more stringent oxygen standard applies, the more stringent oxygen 
standard applies to all RFG produced at the refinery regardless of the 
market. In addition, there is a presumption that, due to fungible 
mixing, each refinery's RFG that is transported by the Colonial 
Pipeline is in part supplied to each city supplied by the Colonial 
Pipeline. This presumption is rebuttable, but the rebuttal normally 
would require a refiner to have transported its RFG in a non-fungible 
manner. Thus, the more stringent standard applies to a refinery whose 
gasoline is transported on the

[[Page 37114]]

Colonial Pipeline regardless of whether the refiner takes delivery of 
RFG in the specific cities that failed the oxygen survey.
    The adjusted oxygen standard applies to all averaged RFG produced 
by a refinery or imported by an importer identified in Sec. 80.41(q). 
In accordance with Sec. 80.41(p), the effective date of this change is 
October 7, 1998.
    Thus, under Sec. 80.41(p) the more stringent oxygen standard 
applies at all points of the distribution system beginning on October 
7, 1998, including terminals supplying the affected covered areas and 
retail outlets in the covered areas. However, EPA believes it may be 
difficult for all regulated parties to transition to the new oxygen 
standard by October 7, 1998. As a result, EPA intends to enforce the 
new oxygen standard in a manner that gives parties additional time. 
Refiners, importers, and oxygenate blenders will be required to meet 
the new oxygen standard beginning October 7, 1998. In the case of 
parties other than refiners, importers, oxygenate blenders, retailers 
and wholesale purchaser-consumers, (e.g., pipelines and terminals 
supplying gasoline to affected covered areas) EPA will enforce the new 
oxygen standard beginning December 7, 1998.<SUP>4</SUP> In the case of 
retail outlets and wholesale purchaser-consumer facilities located in 
the affected covered areas EPA will enforce the new oxygen standard 
beginning January 5, 1999. EPA has initiated a rulemaking to revise 
Sec. 80.41(p) to reflect the need for additional downstream transition 
time when a standard is changed.

    \4\ This supersedes the timing of the enforcement of the 
downstream oxygen standards discussed in ``RFG/Anti-Dumping 
Questions and Answers, November 12, 1996''. See question and answer 
under topic ``SURVEYS 11/12/96''.
---------------------------------------------------------------------------

    Dated: June 9, 1998.
Richard D. Wilson,
Acting Assistant Administrator for Air and Radiation.
Sylvia K. Lowrance,
Acting Assistant Administrator for Enforcement and Compliance 
Assurance.
[FR Doc. 98-18080 Filed 7-8-98; 8:45 am]
BILLING CODE 6560-50-P